Marketing Management

MBA II Semester
Quota System, production driven market

Liberalized Economy

Demand driven market; Informed and Demanding

Customers

Focus on: Value Creation, Relationships, Retention,

company and customer interface, integrated
Marketing programs
 Company Orientations and Philosophy
towards market place

Production Concept: Prevailed during Industrial Revolution

Assumptions:

Consumers will prefer products that are widely available and

Inexpensive.
and

Consumers are primarily interested in product availability and

low prices.
 Product Concept:

Assumption:

Consumers will favour those products that offer the most

quality, performance or innovative features .
Selling Concept:

Companies not only produce the product but also try to convince
customers to buy them.

Assumptions:

If consumers are left alone they will ordinarily not buy enough
of Organization's products. and

Consumer typically show buying dis-interest or resistance and

must be coaxed into buying.
Marketing Concept:

Matching a companys capabilities with customers wants.

Make and-sell to Sense-and-respond

Assumption:

Key to achieve its organisational goals consists of a

company being more effective than competitors.

Customer is the King.

You are the Boss.
Putting people first.
Marketing Concept contd.

Involves:

Customer Orientation.

Integration and unification of company operations.

Focus:

Customer is important.

Profit goals will be reached through satisfied customers.

Holistic Marketing Concept:

Organizations keep in mind all the aspects of:

- Relationship Marketing: Building mutually satisfying long-term

relationships.

- Integrated Marketing: all departments work together to serve

the customers interest

- Internal Marketing: recruiting, motivating and retaining staff

who want to serve customers well.

- Social Responsibility: focus on delivering desired satisfaction

effectively and efficiently that competitors, at same time preserving consumers
and societys well being.
 Defining Marketing
Term Market originates from Latin Word Marcatus,
Physical place where business is conducted

Has wider implications

Customers
Stake Holders
Business Partners
Competitors

William J. stanton: A total system of interacting business

activities designed to plan, promote and distribute
want-satisfying products and services.

American Marketing Association: The performance of

business activities that direct the flow of goods and
services through producers to consumers or users.
 Philip Kotler: A social and managerial process by which
individuals and groups obtain what they need and want
through creating, offering and exchanging products of
value with others.

Marketing is a process by which companies create value

for customers and build strong Customer Relationships in
order to capture value from customers in return.
 Marketing:
Attempt is made to convert societal needs into profitable
Opportunities. In the process activities involved create time,
place and possession utilities. And a Value Proposition

Sales:
An activity which involves order taking and delivery of
Products. In the process it builds goodwill, generates
Demand and does problem solving

Advertising:

Paid form of non personal communication of goods / services

 VALUE
A Ratio between what a customer gets and what he gives.

Perceived tangible and intangible benefits offered by the

products / services and its cost to the customers.

Customer Value Triad, QSP

Quality
(Product, Features, Ingredients, Service Components)

Value
Price Service
(Low, Competitive) (After Sales, Embedded, Extra Efforts
Customers Reflects in the perceived tangible and intangible
benefits offered by the product and its cost to
the customers.

Company Reflects in the cost of the product/ services and

the revenue generated in the selling process.

Value = Benefits / Costs

Benefits: Functional + Emotional

Costs: Monetary + Time + Energy + Psychic

Raise Benefits at same price

Reduce Cost at same benefits
Raise benefits reduce price
Marketing is not only facilitating selling of a product but also
creation of demand.

Needs: State of felt deprivation. Physical, Social and

Individual Needs.

Physical: Basic to Survival

Social: Desire to Belong
Individual: Self Expression

Wants: Needs directed towards specific satisfiers.

Shaped by ones cultural influence, individual personality

and the society.

Demand: Wants + Purchasing Power.

 Maslows Hierarchy of Needs

Self
Actualisation

Esteem

Social

Safety Radial Tyres Ply Tyres

McDonalds Canteen
Physiological
Peter England Local Brand

Companies focus on wants and loose sight of needs and

purchasing power
 Market Segmentation and Target Market

Marketers can not satisfy everyone in the market.

Marketers start by dividing the market.

Market Segment: consists of a group of customers who share

a similar set of wants.

Or fall into similar demographic, psychographic or behavioral

patterns.

Target Market: Lucrative for conducting business; resources

and company objectives.
 Marketing Process

1. Analyse and understand Markets and Prospective

Customers needs and wants. (Market Segmentation,
Target Marketing)

2. Design a customer driven marketing strategy with the

goal of acquiring, retaining and growing target customers.
(Differentiation and Positioning; Marketing Mix)

3. Create a strategy delivering superior value.

4. Build profitable customer relationships and creating

customer delight.

5. Reap the rewards.

 Differentiation: Developing unique differences with the
intent to influence demand.

Positioning: Tailoring a product's image and presentation

to appeal to a selected market segment.

Marketing Mix; includes a combination of tools like;

Product,
Packaging,
Price,
Channels of distribution,
Advertising,
Promotion and
Personal selling

to pursue the marketing objective of the company and

fulfilling needs and wants of the customers.
 Tools of Marketing Mix

McCarthy classified the marketing mix tools into four broad

categories; 4 Ps of Marketing

1. Product: Variety, Quality, Features, Packaging,

Sizes, Warranty, Guarantee

2. Price: MRP, Discounts, Allowances, Payment

Options, Credit Terms

3. Place: Channels, Coverage, Locations, Inventory,

Transportation

4. Promotion: Sales Promotion, Advertising, Public

Relations
Robert Lauterborn suggested 4 Cs

4 Ps Correspond to the Customers 4 Cs

Product Customer Solution

Price Customer Cost
Place Convenience
Promotion Communication
 7 Ps of Marketing Mix or Extended Marketing Mix

Coined by Booms and Bitner, more useful for services

industry .

3 Additional Tools:

5. People: All people directly involved in the

consumption of services. Consultant, Employees,
Management and Customers.

6. Process: Procedures, Mechanisms and Flow of

Activities by which services are rendered and
consumed.

7. Physical Evidence: Communication, Performance

and Experience of existing customers.
 Scope and Functions of Marketing

Functions of Research:
Marketing Research

Product Planning and Development

Functions of Exchange:

Buying and Assembling

Selling

Functions of Physical Treatment:

Standardization, Branding
Packaging
Storage and Transportation
Functions of Facilitating :
Salesmanship

Advertising

Pricing

Financing

Insurance
 Company Orientations and Philosophy
towards market place

Production Concept: Prevailed during Industrial Revolution

Assumptions:

Consumers will prefer products that are widely available and

Inexpensive.
and

Consumers are primarily interested in product availability and

low prices.
 Product Concept:

Assumption:

Consumers will favour those products that offer the most

quality, performance or innovative features .
Selling Concept:

Companies not only produce the product but also try to convince
customers to buy them.

Assumptions:

If consumers are left alone they will ordinarily not buy enough
of Organization's products. and

Consumer typically show buying dis-interest or resistance and

must be coaxed into buying.
Marketing Concept:

Matching a companys capabilities with customers wants.

Make and-sell to Sense-and-respond

Assumption:

Key to achieve its organisational goals consists of a

company being more effective than competitors.

Customer is the King.

You are the Boss.
Putting people first.
Marketing Concept contd.

Involves:

Customer Orientation.

Integration and unification of company operations.

Focus:

Customer is important.

Profit goals will be reached through satisfied customers.

Holistic Marketing Concept:

Organizations keep in mind all the aspects of:

- Relationship Marketing: Building mutually satisfying long-term

relationships.

- Integrated Marketing: all departments work together to serve

the customers interest

- Internal Marketing: recruiting, motivating and retaining staff

who want to serve customers well.

- Social Responsibility: focus on delivering desired satisfaction

effectively and efficiently that competitors, at same time preserving consumers
and societys well being.
Analysing Marketing Environment:

Marketing Environment

External Internal
- Company Image
- Location
Macro Micro - R&D Capability
Economic Conditions - Customers -Financial Capability
Political and Legal
Demographic - Intermediaries -Human Resource
Competition - Suppliers -Production Facilities
Technology
Economic Conditions:

Business Cycle
Purchasing Power of Customers
Inflation
Interest Rates

Business Cycle

Recession

Recovery

Prosperity Depression
Legal and Governmental Factors:

Political Leadership

Stability of Government

Rules and Regulations

Monetary and Fiscal Policies

Patents, IPR, MRTP

Demographic and Socio-Cultural Factors:

Age Structure (composition of population Age-wise)

Gender Distribution
Life Expectancy
Population Density
Household Size (Family Size)
Marital Status
Income and wealth distribution
Employment
Education
Occupation
Value System
Consumption Patterns and attitudes
 Changing Gender Roles:
Related to family
Jobs
Recreation
Buying Behaviour

A Premium on Time:
Paucity of time
Attitude towards gaining more free time
Convenience

Physical Fitness and Health;

Geographical Shift in Population;

Strategies: Product Development

Distribution Arrangements
Pricing Policies
Promotion
Competitive Environment:
Identify Competitive Advantage
1. What is the basis of present advantage?
2. Can these advantages be sustained?

Bargaining Power of Suppliers Threat of New Entrants

Competitive
Environment

Threat of Substitute Bargaining Power of Buyers

Technology:

Technological breakthroughs can affect markets:

By starting new industries;

By radically altering or virtually eliminating

existing industries;

By stimulating markets and industries not related

to new technology;

Accelerating pace of technological changes

Analysing External Micro- Environment:

Customers:
- Needs
- Purchasing power
- Buying Behaviour

Suppliers:
- Raw Materials / Finished Goods
- Cooperative Relationships

Intermediaries:
- Value Creation; facilitating organisations
- Channels of distribution
Analysing Internal Environment:

Company Image;

Location;

Production Facility;

R & D Capability;

Financial Resource;

Human Resource;
Developing Marketing Strategies

Segmentation, Targeting & Positioning

 Market Segmentation

A company can not serve all customers in a category.

Customers differ widely in terms of

Perception
Values
Preferences
Buying habits

Potential Market;

A company has different alternatives; according to their

products or objectives.
Mass Marketing;

A company appeals to a broad range of consumers

through a single basic marketing program.

Companies consider large potential markets.

Assumptions;
1. People have similar characteristics and wants for a
product category.

2. One Marketing Mix Strategy will satisfy them.

3. People do have different characteristics and wants

but it is not worth to develop separate marketing
mix.
 The elements of the marketing mix do not change for
different consumers, all elements are developed for all
consumers.

Major objective is to maximize sales

Single Marketing Mix Strategy consists of:

1 Pricing strategy
1 Promotional program aimed at everybody
1 Type of product with little/no variation
1 Distribution system aimed at entire market

Maruti 800 in 1980s, News Papers, Surf

 Pure Mass Marketing approach is dying rapidly due to.
Intense Competition
Much Aware Customer
Technological Up-gradations
Process
Information

Companies are turning to micro marketing by adopting

different approaches based on Segmentation, Target
Identification and Positioning.

Market Segmentation: Process of identifying smaller groups

of people that exist within a larger market.

Market Segment : consists of a group of customers who

share a similar set of wants, tastes and preferences.

A marketer does not create segment.

 Effective Segments are;

Measurable;

Accessible;

Substantial;

Actionable;

Differentiable;

The purpose is to design a Marketing Mix that more

precisely matches the needs of individuals in a selected
market segment.
 Approaches to build Market Segment:

Homogeneous Demand- uniform, everyone

demands the product for the same reason

Diffused Demand- Product differentiation more

costly and more difficult to communicate.

Cosmetic market, need to offer hundreds of shades

of lipstick.

Firms try to modify consumer demand to develop

clusters of at least a moderate size.

Clustered Demand- consumer demand classified in

2 or more identifiable clusters.

Automobiles: luxury, cheap, Sporty, Spacious

 Process of Market Segmentation

Analyse the needs of customers

Analyse the characteristics of consumers

Dis-integrate the viable, profitable, lucrative segments

Formulate different market mix for different segments

Feedback of various segments

Select the higher potential segments

 Market Segmentation Strategies

Concentration Strategy:

A single market segment with one Marketing Mix.

Segment A

Marketing Segment B
Mix
Segment C

Segment D
 Multi-segment strategy

2 or more segments are sought with a Marketing Mix for each

segment, different marketing plan for each segment.

Marketing
Mix Segment A

Marketing Segment B
Mix

Segment C

Marketing
Mix Segment D
 Bases for segmenting Markets.

Two Broader groups of variables used by companies.

Consumer Characteristics: Geographic,

Demographic and Psychographic.

Different attitudes of professionals and

workers for a product.

Looking at customer responses to benefits, use

occasion or brands.

May examine whether people who want

quality in buying a product differ in their geographic,
demographic and psychographic makeup.
 Major Segmentation Variables

Geographic: Companies can operate in one or few

geographic areas, or

operate in all areas with separate Marketing Mix Regionally.

Cities, Regions
Retailers, Fast Food Chains, Tyres

Demographic: most popular basis. Easier to measure.

Age, Gender, Income, Family Size, Education, Occupation

etc.

Psychographic: refers to as lifestyle analysis.

 Behavioural: buyers are divided on the basis of their
knowledge
attitude
use
response to a product.
Occasions: Life events, transitions, festivals
Benefits: people vary in the benefits they seek from the
same product
User Status: non users, ex-users, potential users, first time
Users
Usage Rate: light, medium and heavy usage.
Loyalty Status: Hard core, split, shifting, switchers.
 Attractiveness of a Market Segment
Size of the segment
Growth Rate of the segment
Competition in the segment
Brand Loyalty of existing customers
Required market share to break even
Whether the company can offer superior value to the
customers
Impact of catering to the specific segment on companies
image
Access to distribution channels
 Identifying Target Markets.

A company can adopt alternative Targeting Strategies.

Alternative Strategies

Narrow Coverage
Broad Coverage
Differentiated Marketing

Micro Marketing
Undifferentiated Marketing
Single Segment Concentration / Concentrated Strategy:

Selecting a single segment and one marketing mix.

Choice of Smaller companies with limited resources.

M1 M2 M3 M4
P1

P2

P3
Selective Specialisation Strategy / Differentiated Strategy:
Multiple segments catered.
Different Marketing Mix to different segments.
Product itself may or may not be different.
Some of the Marketing Mix Tools may vary.

M1 M2 M3 M4
P1

P2

P3
Product Specialisation:

Company Specialising in a single product.

Company builds up strong reputation.

M1 M2 M3 M4

P1

P2

P3
Market Specialisation:

Serving many needs of particular segment groups.

M1 M2 M3 M4

P1

P2

P3
Full Market Coverage:

A company attempts to serve the entire market,

Single undifferentiated marketing strategy, or

Separate marketing mix for each segment.

M1 M2 M3 M4
P1

P2

P3
 Benefits of Segmentation

Opportunity for rapid growth; specially for medium size

companies

Opportunity for rapid growth

More focused; increases profitability

Helpful in formulating strategies

Minimising the risk of failure

Broadens the loyalty base of satisfied customers

Positioning
 Positioning: is the act of designing the companys offering
and image to occupy a distinctive place in the mind of the
target market.

End result of positioning is the successful creation of a

customer Value Proposition.

Product Positioning Vs. Brand Positioning.

Steps Involved in Positioning Task ?

 Steps Involved in Positioning Task:

1. Identifying Competitive advantage

2. Choosing right competitive advantage

3. Selecting an overall Positioning Strategy

4. Developing a positioning statement

5. Communicating and delivering chosen

positioning.
 1. Identifying Competitive Advantage

a. Product; Features; Performance; Durability; Reliability;

Reparability; Style; Design; Quality

b. Service; Delivery; After Sales Services; Customer Care;

Installation;

c. People; Competence; Courtesy; Credibility; Responsiveness;

Communication.

d. Image;

e. Channels; coverage, expertise, performance

 2. Choosing right competitive advantage

How many differences to choose?

USP Unique Selling Proposition

More differentiators; useful in intense competition

Which differences to promote?

Criteria to select differences;
1. Importance
2. Distinctive
3. Superior
4. Communicable
5. Preemptive
6. Affordable
7. Profitable
 3. Selecting an overall strategy

More Same Less

More

Marginal Benefits
Same Loosing Proposition
Proposition

Loosing Loosing
Less Proposition Proposition

Price
 4. Developing a Positioning Statement

Reflected in;

Need Recognition:

Target Segment:

Solution:

Concept:

Differentiation:
5. Communicating and delivering the chosen position

More Same Less

More COMPETITIVE
QUALITY VALUE

Same

Less
 Single Benefit Positioning: rare to find in intense
competition

Double Benefit Positioning: more distinctive

Triple Benefits Positioning: challenging to communicate

and convince; COUNTER SEGMENTED

Why Repositioning ?
1. Under Positioning: Vague idea about the brand.

Pepsi in Vanilla Flavour

2. Over Positioning: Narrow image of the brand.

Tanishque

3. Confused Positioning: Confused image in the mind of

customers.

Maruti Versa and Maruti Omni VAN

4. Doubtful Positioning: hard to believe the brand claims.

Analysing Consumer Markets and Buying Behaviour
 Every Marketing Activity starts and ends with consumers.

Marketers Identify decision makers.

It is important to know :

who are the people that consume the product

play a role in buying decisions

why they take certain decisions

when they buy

where they buy